Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.19.3
Stock-Based Compensation
9 Months Ended
Sep. 30, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock-Based Compensation

5. STOCK-BASED COMPENSATION

We use broad-based stock plans to attract and retain highly qualified officers and employees and to help ensure that management’s interests are aligned with those of our shareholders. We have also granted equity-based awards to directors, nonemployees and certain employees of Cellectis.

In December 2014, we adopted the Calyxt, Inc. Equity Incentive Plan (2014 Plan), which allowed for the grant of stock options, and in June 2017, we adopted the 2017 Omnibus Plan (2017 Plan), which allowed for the grant of stock options, performance shares and other types of equity awards.

As of September 30, 2019, 2,074,654 shares were registered and available for grant under effective registration statements, while 2,585,610 shares were available for grant in the form of stock options, restricted stock, restricted stock units and performance stock units under the 2017 Plan. Stock-based awards currently outstanding also include awards granted under the 2014 Plan, under which no further awards will be granted.

Stock Options

The estimated fair values of stock options granted, and the assumptions used for the Black-Scholes option pricing model were as follows:

 

 

Nine months ended September 30,

 

 

2019

 

 

2018

 

Estimated fair values of stock options granted

$

10.70

 

 

$

9.57

 

Assumptions:

 

 

 

 

 

 

 

Risk-free interest rate

1.9% - 2.5%

 

 

2.2% - 2.8%

 

Expected volatility

77.9% - 78.9%

 

 

40.9% - 57.2%

 

Expected term (in years)

6.8 – 10.0 years

 

 

5.6 – 10.0 years

 

 

We estimate the fair value of each option on the grant date or other measurement dates if applicable using a Black-Scholes option-pricing model, which requires us to make predictive assumptions regarding future stock price volatility, employee exercise behavior and dividend yield. The risk-free interest rate for periods during the expected term of the options is based on the U.S. Treasury zero-coupon yield curve in effect at the date of grant. We estimate our future stock price volatility using the historical volatility of comparable public companies over the expected term of the option. Our expected term represents the period of time that options granted are expected to be outstanding determined using the simplified method. We have not nor do we expect to pay dividends for the foreseeable future.

Option strike prices are set at 100 percent or more of the closing share price on the date of grant, and generally vest over six years following the grant date. Options generally expire 10 years after the date of grant.

Information on stock option activity follows:

 

Options

Exercisable

 

 

Weighted-

Average

Exercise

Price Per

Share

 

 

Options

Outstanding

 

 

Weighted-

Average

Exercise

Price Per

Share

 

Balance as of December 31, 2018

 

1,278,038

 

 

$

7.45

 

 

 

3,201,887

 

 

$

10.67

 

Granted

 

 

 

 

 

 

 

 

 

1,490,000

 

 

 

14.45

 

Exercised

 

 

 

 

 

 

 

 

 

(86,952

)

 

 

3.61

 

Forfeited or expired

 

 

 

 

 

 

 

 

 

(163,809

)

 

 

13.79

 

Other activity

 

 

 

 

 

 

 

 

 

12,495

 

 

 

13.29

 

Balance as of September 30, 2019

 

1,638,228

 

 

$

8.20

 

 

 

4,453,621

 

 

$

11.95

 

 

Stock-based compensation expense related to stock option awards was as follows:

 

 

Three months ended

 

 

Nine months ended

 

September 30,

 

 

September 30,

In Thousands

2019

 

 

2018

 

 

2019

 

 

2018

 

Stock-based compensation expense

$

1,885

 

 

$

(78)

 

 

$

4,162

 

 

$

1,126

 

The aggregate intrinsic value of options outstanding and exercisable at September 30, 2019 was $2.1 million and the weighted average remaining contractual term was 8.1 years as of that date.

Net cash proceeds from the exercise of stock options less shares used for minimum withholding taxes and the intrinsic value of options exercised were as follows:

 

 

Three months ended

 

 

Nine months ended

 

 

September 30,

 

 

September 30,

 

In Thousands

2019

 

 

2018

 

 

2019

 

 

2018

 

Net cash proceeds

$

6

 

 

$

887

 

 

$

314

 

 

$

2,128

 

Intrinsic value of options exercised

$

13

 

 

$

1,257

 

 

$

893

 

 

$

6,416

 

 

As of September 30, 2019, unrecognized compensation expense related to non-vested stock options was $14.9 million. This expense will be recognized over 58 months on average.

Restricted Stock Units

Units settled in stock subject to a restricted period may be granted under the 2017 Plan. Restricted stock units generally vest and become unrestricted over five years after the date of grant.

Information on restricted stock unit activity follows:

 

 

Number of

Restricted Stock

Units Outstanding

 

 

Weighted-

Average Grant

Date Fair Value

 

Unvested balance at December 31, 2018

 

1,051,414

 

 

$

10.15

 

Granted

 

100,000

 

 

 

12.48

 

Vested

 

(216,173

)

 

 

8.34

 

Forfeited

 

(12,130

)

 

 

13.39

 

Unvested balance at September 30, 2019

 

923,111

 

 

$

10.55

 

 

The total grant-date fair value of restricted stock unit awards that vested was as follows:

 

 

Three months ended

 

 

Nine months ended

 

September 30,

 

 

September 30,

In Thousands

2019

 

 

2018

 

 

2019

 

 

2018

Grant-date fair value

$

392

 

 

$

40

 

 

$

1,803

 

 

$

1,791

 

Stock-based compensation expense related to restricted stock units was as follows:

 

 

Three months ended

 

 

Nine months ended

 

September 30,

 

 

September 30,

In Thousands

2019

 

 

2018

 

 

2019

 

 

2018

Stock-based compensation expense

$

706

 

 

$

667

 

 

$

2,289

 

 

$

1,890

We treat stock-based compensation awards granted to employees of Cellectis as deemed dividends. We recorded deemed dividends as follows:

 

 

Three months ended

 

 

Nine months ended

 

September 30,

 

 

September 30,

In Thousands

2019

 

 

2018

 

 

2019

 

 

2018

Deemed dividends from grants to Cellectis employees

$

296

 

 

$

415

 

 

$

1,072

 

 

$

1,790

As of September 30, 2019, unrecognized compensation expense related to restricted stock units was $3.5 million. This expense will be recognized over 47 months on average.

Performance Stock Units

In June 2019, we granted 311,667 performance stock units under the 2017 Plan to three executive officers. The performance stock units will vest at 50%, 100% or 120% of the shares under the award at the end of a three-year performance period based upon increases in the value of our common stock from the grant price of $12.48. The performance stock units will be settled in restricted stock upon vesting, with restrictions on transfer lapsing on the second anniversary of the restricted stock issuance date.

The estimated fair values of performance stock units granted, and the assumptions used for the Monte Carlo simulation pricing model were as follows:

 

 

Nine months ended September 30, 2019

Estimated fair values of performance stock units granted

$

7.06

Assumptions:

 

 

  Risk-free interest rate

1.71%

  Expected volatility

75.0%

  Expected term (in years)

3.0 years

Stock-based compensation expense related to performance stock unit awards was $114,000 for the three and nine months ended September 30, 2019.

As of September 30, 2019, unrecognized compensation expense related to performance stock units was $2.1 million and will be recognized over 57 months.

Cellectis Equity Incentive Plan

Prior to 2018, Cellectis granted stock options to our employees. Compensation costs related to these grants have been recognized in the statements of operations with a corresponding credit to stockholders’ equity representing Cellectis’ capital contribution to us. The fair value of each stock option was estimated at the grant date using the Black-Scholes option pricing model.

We recognized a reduction in stock-based compensation expense related to Cellectis’ grants of $96,000 for the three months ended September 30, 2018, and $107,000 for the nine months ended September 30, 2018. Expenses in 2019 were de minimus.